China’s auto sales are redlining. First to recover from carmageddon China had jumped into double digit growth territory in February and never looked back. Months after month, the increases became bigger. Now, they explode.

In July, China registered the biggest gain since January 2006, passenger vehicles up 70.5 percent, overall vehicle sales up 64 percent. Double digit growth has solidly returned to China.

“Sales in the second half will continue to be strong, even if there’s a slight slowdown in growth rates,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai via Gasgoo. “Not only has demand for small cars been good, bigger vehicles have started to recover as well.” Cash for Clunkers notwithstanding, with numbers like these, China will easily outdistance the USA as the world’s largest car market in 2009.

Good. I’m glad to see China’s economy starting to grow more based on China’s domestic demand than on export markets. China has the world’s largest population and cannot become a fully industrialized modern country simply by selling exports to the rest of the world.

America must continue to push its products into China and India. Thing is, for those that can actually afford a Buick or Cadillac in China, owning one is similar to owning a German car here.

Chinese people generally don’t want Chinese cars – something I realized while I was living there. Many Chinese hate the Japanese still so they actually perfer a Buick to a Lexus – some of them REFUSE to buy anything even remotely Japanese.

When i go back to China on business, I’m gonna rent a Buick enclave – or a lacrosse if its available.

The vast majority of the Chinese population is still living on less than $1 per day. My colleagues who live there are making less than $20,000 a year to do what we get paid $50,000 and up for here. Yes I understand the price consumer index difference after having lived there, but, the truth is, they only buy Chinese made cars if they have no other choice because of their financial situation.

In China, people with more money buy foreign cars such as Hyundai, Toyota, Honda and Ford if they can afford to – they hate Chinese made products and go out of their way to avoid them.

The only problem however, buying foreign cars in China, is that the infrastructure is currently geared towards the bicycle/moped and motorcycle market. While you can easily get your bike repaired – having a car repaired there is more difficult and more costly.

I actually bought a Motorcycle there for only $800. In America, the same model retails over $9000. when I considered buying a car from Chinese automaker GAO XING and then MEI TIAN, their cars cost well over $30,000 US for what you’d pay just $15,000 here for. For a Chinese person, a Cherry is affordable and just the right size for their living conditions considering parking in China is a bitch since their infrastructure isn’t geared towards cars besides those shitty Volkswagon Santana Taxis – which typically are moving too much to have to park anyway.

I lived in Shanghai, Hang Zhou, Beijing and Japan, Shinjuku-Ku Tokyo by the way. This is what I’ve seen.

@john horner writes
“Good. I’m glad to see China’s economy starting to grow more based on China’s domestic demand than on export markets. China has the world’s largest population and cannot become a fully industrialized modern country simply by selling exports to the rest of the world.”

More to the point, must China become an auto mobilized nation to be a fully industrialized modern country? If so we are probably all in big trouble. China has come from nowhere 10 years ago to the largest consumer of automobiles on earth and still has per capita car ownership that is a small fraction of that in the US. Putting aside global warming concerns (which is increasingly difficult) where is all that gasoline going to come from?

@PeteMoran writes
“Is domestic unit sales a competition between nations now? Is that even a measure of anything?”

Like most things newsworthy here it’s only a competition when the US falls from #1

It might be a good idea to use a lot of caution when looking at economic data from China. Barry Ritholtz highlighted a piece last week from a former Morgan Stanley analyst exposing some huge fault lines in China’s economy.

The former Morgan Stanley analyst is most likely a former Morgan Stanley analyst for a reason.

First off, he doesn’t point out huge fault lines in the Chinese economy. He’s talking about a stock market and real estate bubble.

If there’s a stock market bubble in China, then there is one in the US also. Simply overlay the Shanghai index with the Dow and the S&P 500 and ye shall see. There was a Chinese bubble in late 2007, when the Shanghai index was above 6000. Without creating a hue and cry, it steadily degenerated to 1760 in November 2008. Ever since, it recovered to the 3000 area. It has a long ways to go until it hits bubble territory. The Dow and the S&P likewise recovered. Where are the big Chinese fault lines?

Real estate bubble? I see none. I’m in overbuilt Beijing where buildings are empty and where lots of unfinished buildings are standing around. Their developers ran out of money. Chinese real estate is something to stay away from anyway. In real estate, buildings depreciate, land appreciates. In China, the government owns the land. You buy a 75 year lease. The latest comments of Savills, a big real estate broker in China, is: “Despite recent optimism, however, a significant volume of supply in the second half of the year is expected to maintain pressure on rents and occupancy rates for at least the next six months.” If a broker talks like this, it’s SELL, SELL, SELL

The doozie is the statement “When the dollar becomes strong again, liquidity could leave China sufficiently to pop the bubble. ” If that holds true, then the Chinese “bubble” has a long ways to go. The dollar shows no signs of turning around. My prediction is it will get seriously weak, due to US deficit spending. Even the former Morgan Stanley analyst doesn’t see the dollar getting strong again before 2012 …

In any case, I don’t know what this has to do with cars or social unrest.